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Empowering Verizon's Cloud

Despite Verizon consistently being able to keep churn rates at very low levels over the last decade, rates have edged up compared to five years ago. The company's churn rate for retail postpaid customers came in at 0.93% and 0.97% for the three months and six months ended June 30. Five years ago during the same period, the figures were at 0.83% and 0.88%, respectively. The latest wireless churn rate data on other telecom companies show
T-Mobile USA(TMUS - Get Report) coming in at 1.6% and 1.8% during those same periods, and AT&T's arriving at 1.02% and 1.03% and almost rivaling Verizon's during those respective time frames. In any case, Verizon still has the chance to prove that it's able to beat its own churn rate lows again in the coming years.

"The more difficult it is to switch wireless providers, the lower churn becomes," Frank added. "If a good portion of your data is 'stuck' in the Verizon cloud, you are less likely to switch to AT&T if you cannot access your Verizon cloud to port all your data."

Verizon Wireless has recently also begun offering cloud services specifically to households and individuals. Verizon Wireless began rolling out Verizon Cloud for smartphones and tablets in May, allowing for the transfer of data between Android and iOS devices and 125 gigabytes of storage space with up to 500 megabytes of it for free, which could help reduce churn rates for individual and family plans.

Despite the current benefits, there remains the risk that cloud services could become commoditized in the telecom world as big players such as AT&T also foray into the business. Last November, AT&T said it was launching Project "VIP" or "Velocity IP" where it would invest $14 billion over the next three years into significantly expanding and enhancing its wireless and wireline IP broadband networks to help AT&T pursue multiple new billion-dollar business opportunities in key growth areas that it said includes the cloud. This was followed Wednesday by AT&T's announcement that
Microsoft (MSFT - Get Report) will be pairing its Windows Azure cloud platform with AT&T's virtual private networking technologies to become available to customers by the middle of next year. But customers can only benefit from the commoditization as the telecom giants turn to options such as increasing free storage space and adding more security features to increase the competitiveness of their cloud offerings to help tide these corporations over until their next big breakthrough in building out the next generation of high-speed wireless networks.

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